Flood of claims unlikely to wash away insurers

ASX-listed insurers face a hefty jump in claims arising from the floods hitting NSW and Queensland.

ASX-listed insurers are facing a steep jump in claims arising from the floods hitting NSW and Queensland. Picture: Toby Zerna

As the damage bill rises from floods sweeping across the coast from Queensland to NSW, insurance companies are reassuring investors losses will be limited.

The latest data from the Insurance Council of Australia shows insurance claims related to the floods doubled on Tuesday, topping 31,000 by midday.

This comes after 15,000 claims were reported on Monday.

The ICA said it was too soon to estimate the cost of the floods as more homes were lost and claims continue to be reported.

The peak body for the insurance industry has expanded its catastrophe declaration to cover large areas of NSW impacted by the wild weather, now making its way down the state’s coast.

An insurance industry task force has been set up to identify and address issues arising from the extreme floods.

The doubling in claims has hit Insurance Australia Group, with the listed insurer flagging it now expected claims to not top its $95m maximum event retention.

Maximum event retentions pass on costs above their limits to reinsurers of insurers.

IAG managing director and chief executive Nick Hawkins said the insurer had deployed its major events team to assist customers.

“Our teams are assessing properties wherever possible and will move into the flood impacted areas as soon as waters recede,” he said.

The insurer said losses would rise in coming days, with 6700 claims now landing from IAG customers

Claims related to the NRMA brand now represent 73 per cent of all claims for IAG, in a development insurance analysts may point to the progress of the heavy rains south through NSW.

That’s compared to Queensland-heavy exposed insurer Suncorp which warned its losses from the floods were likely to hit its $75m ceiling.

Suncorp said on Monday 70 per cent of its 5000 claims had come from Queensland customers.

However, it assured investors its $75m maximum event retention would guard against a loss blowout.

European insurer Allianz said its customers had made 4800 flood related claims, with losses now topping $52m.

However, Allianz said it was too early to know whether the claims volume would trigger its catastrophe reinsurance treaty.

abrdn investment manager Shawn Lee said while listed insurers would be protected by huge blowouts from natural catastrophe losses negotiations with reinsurers for a natural catastrophe program in the coming year will be more complicated.

“These numbers will be under pressure given the loss rates,” he said.

“It points to the inflationary pressures we’re seeing in the insurance industry.”

Mr Lee said IAG’s greater share of the NSW market may expose it to coming losses from wild weather set to strike NSW and Sydney in coming days.

“It depends on what happens in NSW, that’s where the storm is headed,” he said.

The 1999 hail storms that hit Sydney’s eastern suburbs still top tables for the most expensive insurance event in Australian history, with a $5.8bn bill.

Suncorp shares closed 1.2 per cent higher at $10.90 after falling 0.7 per cent at the start of trade on the ASX. QBE slipped 0.2 per cent to $11.47, while IAG closed flat at $4.60 in a stronger market.